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Interbank Rates Expected To Drop On FAAC Disbursement

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Having risen to 36 per cent last week, overnight rates at the Nigeria Inter Bank Offer Rates (NIBOR) is expected to moderate this week as the market anticipates disbursement from the Federation Accounts Allocation Committee (FAAC) and N350 billion capital expenditure fund.

NIBOR rates which is the rate at which lend to one another rose sharply last week amidst tight liquidity as N304.23 billion was mopped up from the financial market last week. N121 billion was raised at an auction of local currency bonds while N183.23 billion was raised through the sales of Treasury Bills.

Overnight rates had risen during the three-day trading week from 16.54 per cent to 36 per cent while 1-, 3- and 6-month rates rose to 20.45, 21.52 and 25.07 per cents from 19.96, 20.83 and 23.84 per cents respectively.

According to data released by the Debt Management Office (DMO) the bonds were sold at higher rates across board as it raised N15 billion through the 2021 paper at 15.14 percent, compared with 15.08 percent at the previous auction last month. It also sold N30 billion of 2026 debt at 15.53 percent, against 15.28 percent, and N60 billion of 2036 debt at 15.59 percent, compared with 15.53 percent.

Meanwhile the N183.24 billion worth in treasury bills auctioned on Wednesday was sold with mixed yields on all the tenors. The debt office said it raised N48.10 billion of three-month paper at 14 percent, down from 14.38 percent at August 31, auction, sold N48.45 billion worth of the 6-month paper at 17.77 percent, higher than 17.50 percent previously.

A total of N86.69 billion was sold in the 1-year debt at 18.48 percent against 18.42 percent at the last auction.

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